The Pritzker-Grinker School was awarded more than two million dollars in special education contracts with the Chicago School Board between 1985 and 1994. The Illinois Department of Children and Family Services awarded more than seven million dollars in contracts to Rivers for the housing needs of pregnant teenagers. Rivers also landed five million dollars in grants and funding from the U.S. Department of Housing and Urban Development (HUD). On top of all of that, Rivers ran a shelter for the homeless and was "visible" in charitable undertakings geared toward the black community, such as Jesse Jackson's Operation PUSH.
Over one hundred thousand dollars had been misappropriated for purposes of parties, flowers and alcohol. And, of course, there were the illegal fundraisers for Democratic candidates. Rivers had a limousine transport a costumed Santa Claus around the city of Chicago with invitations to her Christmas party and glasses of champagne to pass.
Perhaps there were no reasons for anyone to think anything of the interesting manner in which Rivers tight-roped her way between a world of need and despair and a world of abundance.
Not until Rivers started to provide them herself.
When Rivers failed to comply with the city's demand for financial records, a monitor was sent to inspect two of her city-financed shelters. Rivers refused to show the monitor one of them. It was later discovered that Rivers was counting beds twice. Two years later, HUD cancelled one of Rivers' grants after an audit concluded her foundation had not performed "acceptably" under the terms and conditions of the grant. The state Department of Children and Family services cancelled its arrangement with Rivers the same year.
On April 25, 1996, Rivers was indicted by a federal grand jury for defrauding city, state and federal agencies out of five million dollars in grant funds. U.S. Attorney James B. Burns said Rivers abused and misused social welfare programs "for her own personal gain" and produced a forty page, forty count indictment to make the case. Burns and his fellow prosecutors charged Rivers with paying off employees of the Illinois Department of Children and Family Services for their assistance in getting approval for contracts sought by her foundation. She was also accused of paying off bankers for access to cashier's checks (which were used to conceal the sources of her money), forging letters, making false claims with respect to matching funds, and lying about program costs.
Prosecutors argued that money meant for the homeless, troubled teens and handicapped children was funneled to her son's Mercedez-Benz, her stepson's tuition and those lavish parties. Rivers (a.k.a. "the Duchess") was also said to have directed money to employee salaries and expenses at the recording studio and a fast-food chicken restaurant. Some of it supposedly found its way into the real estate taxes of a friend's hotel.
In April of 1997, Rivers plead guilty to an indictment featuring forty counts of theft and tax evasion. Rivers was accused of stealing over a million dollars in federal money intended for programs to help homeless families and pregnant teens. The sentence was five years and ten months in federal prison, although the judge would have made it longer had Rovers not been so old (66)! As he put it:
"You had two organizations meant to serve the neediest of our citizens that have been destroyed by this. To me, that's not the appearance of evil, that's evil itself."But, the Rev. Jesse Jackon explained:
"She ain't shot nobody. She ain't dealt in drugs. She ain't [running] a house of prostitution . . . She's a good person who overspent a grant or so."
Corporate filings show Jackson put Rivers on the board of directors of Rainbow/PUSH Coalition just four months after the pardon.